Sustainability as a top priority on the corporate agenda
Sustainability is more than a buzz word; it is increasingly becoming a core guiding principle of our society. Driven by stakeholder demands and political regulations, the topic is now a top priority on the corporate agenda. Instead of mere growth and profit, an integrated view of economic, social and ecological aspects is playing an increasingly important role for long-term development. Sustainability is becoming a "business imperative" and thus a critical management task.
As part of our annual CxO study, we asked 250 executive board members of international companies from 11 industries which strategic initiatives need to be prioritized to ensure mid- and long-term growth. The questionnaire focused on 11 strategic priorities including three sustainability-related initiatives:
Ecological sustainability orientation of business strategy and activities including the topics of climate neutrality/net zero, decarbonization, circular economy and sustainability strategy/measures/business models
Employee engagement and new work addressingremote and flexible work, new collaboration models, necessary competencies, leadership, employee motivation and employee health
Corporate diversity and inclusion comprising cultural diversity, women in the workplace/in leadership, gender equality equal pay, wellbeing and social responsibility
Against the backdrop of the growing momentum of sustainability that has been described, it is not surprising that two of these sustainability initiatives were ranked as top 3 strategic priorities by the interviewed companies (see figure 1).
Overall, CxOs consider the green transformation of their business as the second most important priority in their strategic management agenda with 82% of all questioned executives seeing the integration of ecological sustainability in their business strategy as important or very important. The initiative has gained enormously in importance since our CxO survey a year ago, in which only 14 % of top decision makers attached very great importance to the topic. The significance of this priority is driven by industry trends, such as circular economy/cradle-to-cradle and energy efficiency in Manufacturing/Construction and decarbonization in Automotive/Utilities.
Additionally, CxO have recognized that the wellbeing, motivation and development of their employees is a top priority: 76% of all top managers interviewed considered employee engagement and new work as important or very important, making it the third most important priority for strategic decision markers (see figure 3). Executives understand the value of new work and try to adopt flexible and new work arrangements, especially for young professionals. Overall, the service industry sees the initiative as more important than the manufacturing industry.
Although the topic of corporate diversity and integration is widely discussed in the media, it is rated relatively low ("only" 18% of CxOs consider it very important and 30% consider it important), suggesting that it is not (yet) a strategic issue for top decision-makers.
Sustainability in its three dimensions of economy, ecology and social encompasses a wide range of topics, some of which apply to all industries and others of which are industry-specific. Figure 4 shows the most important trends in each industry and the CxOs' expectations regarding their impact on business operations.
It is clear that sustainability has gained momentum and importance. To be successful in the mid- to long-term, it is more important than ever for companies to have a clear view on the material risks and opportunities of sustainability, to place it at the centre of corporate strategy and to integrate it into processes and structures. This in turn places great importance on establishing transparency and on an ongoing, integrated performance management.